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AFM131 Final: Impact of Government detailed notes on the "impact of government" slide with examples

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aquamarinecat824
16 Oct 2011
School
University of Waterloo
Department
Accounting & Financial Management
Course
AFM131
Professor
Robert Sproule

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AFM131 Full Course Notes
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AFM131 Full Course Notes
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Document Summary

Role of government (benefits, associations, impacts: promotes competition, government expenditure has an impact on the economy, protects our well beings (e. g. regulations on food, working conditions, services the government provides (assistance) Government really began involvement after the great depression (opened the door to increased government association) Government built the railway that introduced cross-country trade. Government has spent far more money than they have spent in ten years. Competing for limited resources, thus law of supply and demand, prices go up. Where will they find all the resources. Tax cascading: taxes that are being added on, cost of the input rises and the price charged rises. Prior to hst, when pst was applied to the inputs, that became an additional cost to the manufacturers who passed that cost on to us (consumers)

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Related Questions

1. In a county’s 2018 CAFR, general government expenses on the government-wide statement of activities are $435 million and general government expenditures on the governmental funds statement of revenues, expenditures, and changes in fund balances are $385 million. What is a possible reason why expenditures are lower than expenses?

A. Accrued OPEB earned by governmental fund employees in 2018

B. Capital assets purchased by governmental funds in 2018

C. Salaries paid to governmental fund employees in 2018

D. Maintenance costs incurred by governmental funds in 2018

sales taxes property taxes income taxes and fees of various kinds:

a) provide revenue for spending by state and local government.

b) are the least used types of revenue generation used by state government.

c) fund government spending at the federal levels.

d) are exampls of implicit liabilities.

Transfer payments are payments which:\

a) which are essentially tax refund.

b) governments make to households when government receives a good or service.

c) governements make to households even of government had not received a good or service from the household.

d) erode the purchasing power of the economy.

The government has a budget deficit if:

a) its total revenues are greater than its total expenditures.

b) its total revenues are equal to its total expenditures.

c) the money supply is less than total expenditures.

d) its total revenues are less than its total expenditure.

The state government is considering spending $60 million to protect a local waterway. If they spend this money, experts tell them that the benefits (mostly coming from protecting local fish and wildlife) will be valued at $8 million per year in years 1 through 10.

-

a. The government budgeting office uses a discount rate of 7% to evaluate whether this is a good use of government funds. Will they suggest that the government should spend the money? Explain why 7% might be a reasonable discount rate for the government to use in this context.

-

b. The government’s environmental protection agency uses a discount rate of 2% to evaluate whether this is a good use of government funds. Will they suggest that the government should spend the money? Explain why 2% might be a reasonable discount rate for the government to use in this context.

-

c. Now instead, the government is considering spending $60 million on an environmental protection project that will have benefits of $8 million per year 101 years to 110 years in the future. Will the government think it’s a good idea to spend the money if it uses a discount rate of 2%? Some would argue that the government should instead use a discount rate of 0% in this case. Explain why and show whether the government should spend the money if it uses a 0% discount rate.